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Billing before job completion

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As a practice, we currently only raise a client bill once the work has been completed. We have an increasing problem obtaining records from clients which delays the billing and subsequent cash flow and are considering introducting a fixed fee charge basis and monthly direct debits.

Although this will help to improve cash flow, my question is whether we can / should  raise monthly bills for the agreed work even if there's a backlog due to delay in receiving records? Or would the funds be more appropriately held on account? 

Would it make a difference if in the engagement letter, the fixed fee included unlimited advice which could arguably be charged for as a retainer whether or not the main piece of work (e.g. the monthly bookkeeping) has been completed?

Thanks in advance for your help. 

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ALISK
By atleastisoundknowledgable...
18th Feb 2020 15:28

This is a very divisive topic, so expect some grief!

For most clients, we do monthly fixed fee ‘retainers’ invoiced monthly as per your final paragraph.

A (I believe) minority of people on here will say that they have monthly DDs which are PoA and they only raise an invoice once the work is now. IMO that just creates too much admin.

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Replying to atleastisoundknowledgable...:
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By meadowsaw227
19th Feb 2020 08:42

Does "retainers" mean if your client wants to leave, you get around having to give a refund if you haven't done any work for them.
A new client has had to pay twice for the same work due to "retainers".
Very dodgy.

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Replying to meadowsaw227:
ALISK
By atleastisoundknowledgable...
19th Feb 2020 14:50

As I said, divisive.

I’m not wholly unreasonable and have given refunds when asked. What normally happens is that it’s agreed they’ll stay until the YE, then move and we’ll do the accounts. Although I lose very few clients to other practices, most of my client loses are due to cessation one way or another, so the whole retainer thing isn’t a major issue for us.

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By Mr_awol
19th Feb 2020 11:15

I'm not averse to accepting payments on account - we do. I generally disagree quite strongly, however, with billing for work not completed.

If I instruct a solicitor, I might give them a little bit up front for disbursements, and will probably agree stage payments as they complete work. Same for builders, car dealers, or pretty much anything I buy or have to pay out for. Personally if I was engaging an accountant and was asked to sign up to a monthly sub, or worse still, pay the whole lot up front, I'd be looking elsewhere.

I appreciate it's attractive for start-ups and small practices, but wouldn't be how I would want to operate - unless a specific client had previous history of poor payment or a high risk of not paying/not being able to pay. But those are exceptions, not the basis for a standard policy.

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Caroline
By accountantccole
19th Feb 2020 11:39

Previous environments, we have worked with standing orders paid monthly (as payments on account), bills raised annually where mostly year end accounts, or quarterly where bookkeeping is involved. Broadly fixed fees but need a get out that some adhoc queries actually require investigation or calculations so not necessarily included in the fixed fee.
Current place bills monthly/quarterly based on WIP. Just because a final set of accounts hasn't been sent out, doesn't mean a significant piece of work hasn't been undertaken so not unreasonable to bill as you go, particularly where clients are holding things up with outstanding queries

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blue sheep
By NH
21st Feb 2020 10:31

we charge and bill approx 50% of our clients monthly, the letters of engagement state clearly that they are paying us for a monthly accounting service and whatever needs to be done we do wherever we are in the year, keeps life very simple, clients are happy, our cashflow is great.

for one client you might get 11 payments before doing much work, for another you might do loads of work after only one payment, quite frankly I dont care, swings and roundabouts, in working that way for a number of years I have never had a client complaint.

When we first started taking monthly payments we tried the POA route but it was so much hassle we ditched it.

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By JD
21st Feb 2020 13:19

Gently, is this really a cause of any cashflow issue, unless you have a number of part completed jobs with nothing getting out of the door. Perhaps an initial review of records and not starting any job unless the records are complete will solve your problem or comment in your L of E, indicating that for extended work you will bill at the end of every month

Separately anybody in favour of adopting a subscription model, the same as many other service providers at the moment, software being the obvious example. It would solve that possible issue of needing to make a refund

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